Estate Analysis

If you are concerned about your estate and the future security of your loved ones, considering an estate plan would be very beneficial to you. Such a plan helps ensure that your family and financial goals are met after your death. Most estate plans include a will, living will, assignment of power of attorney and medical power of attorney. For some people, a trust may also make sense. WPC can help in the creation of such plans, being mindful of both federal and state laws governing estates. 

Under the current US Estate Tax law, a family-owned business stands to lose 50% of all its assets when it passes from one generation to the next, including land, buildings, equipment, money and value. 70% of families choose to cash out or abandon their business after just one generation and only 13% survive into a third generation.

Real Life Examples

Jacqueline Kennedy Onassis hired some of the worlds finest tax planners so that she could leave the bulk of her estate to charity and her family. Her executors valued her estate at $43.7 million, though the fantastic prices some of her property brought at auction prompted an IRS audit to determine whether its true value was closer to $73 million. There was no requirement in the will that any money go to a trust, and the children determined that it made more financial sense for them to sell her assets to pay the estate taxes. Less than $500,000 of the estate has gone to charity. Mrs. Onassis' executors told the state thatÖthe estate had $18 million, but owed $23 million in estate taxes. 

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Sammy Davis, Jr's wife was forced to hold an auction in an effort to raise the $7 million federal estate tax bill he left behind. She sold literally every personal memento from his tap shoes, to his gold record award for the hit song The Candy Man. The event raised only $439,000, only a fraction of the massive tax bill. 

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Joseph Robbie was the owner of the Miami Dolphins and a successful businessman. At his untimely death his estate was valued at US$100 million. Estate taxes due to the US Treasury, in cash, nine months after his death were in excess of US$45 million. The family was forced to immediately sell the team, one of the most valuable franchises in professional sports, at a deeply discounted price. The sale of the Dolphins was required to pay the estate taxes. The family ended up in bitter resentment. This could have all been avoided with a simple life insurance policy that would have paid the estate taxes. 

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J.P Morgan was not immune to the tragedies of conventional estate planning. Upon his death at age 76 in 1943, his gross estate totaled just over $17 million. After paying more than $9.3 million in combined Federal and State estate taxes and almost $2 million in attorney's fees, executor fees, administration expenses, and debt settlement, his heirs inherited about $5 million. The estate suffered a 69% shrinkage. A simple life insurance policy could have preserved his estate virtually intact for his heirs.

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Conrad Hilton created the largest and most profitable international hotel empire of his time.

At the time of his death in 1979, at age 92, his gross estate totaled $199 million. He left the bulk of his estate to his charities. Mr. Hiltonís estate paid over $100 million in Federal estate taxes leaving less than US$100 million for his charities. With proper planning and life insurance diversification, his estate could have contributed hundreds of millions to charity. 

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Alwin C. Ernst was a Founder and Senior Partner of one of the nationís most prestigious big 8 national accounting firms. At the time of his death at age 66, his gross estate equaled more than $12.5 million. His heirs received only $5.5 million. Estate taxes took $7 million. He only needed a simple life insurance plan to help mitigate his estates exposure to taxation.